TORONTO, July 2, 2021
/CNW/ - Excellon Resources Inc. (TSX: EXN) (TSX: EXN.WT)
(NYSE: EXN) (FRA: E4X2) ("Excellon" or the
"Company") is providing an update on the legal action in
Mexico disclosed on December 5, 2019 in respect of the La Antigua
mineral concession ("La Antigua") that is part of the Evolución
Property in Zacatecas. La
Antigua was included in Excellon's
acquisition of Silver Eagle Mines Inc. ("Silver Eagle") in 2009 and
includes a portion of the Evolución mineral resource at
Miguel Auza. The concession is
subject to an exploration and exploitation agreement with purchase
option (the "Agreement") dated December 3,
2006 between San Pedro Resources SA de CV ("San Pedro", now
a subsidiary of Excellon) and the owner (the "Plaintiff") that
provides, among other things, for a minimum payment of US$2,500 plus value added tax per month (the
"Advance Royalty") and the payment of a 3% net smelter return
("NSR") royalty. San Pedro has the
right to purchase absolute title to La Antigua including the NSR
royalty upon payment of US$500,000.
San Pedro has accrued the Advanced
Royalty on an ongoing basis and the Agreement currently remains in
force.
Though the Miguel Auza Mine never reached commercial production
and was put on care-and-maintenance in December 2008 prior to Excellon's acquisition of
Silver Eagle, the Plaintiff sued San
Pedro for non-compliance with the Agreement and specifically
for not operating the Miguel Auza Mine. The Plaintiff was awarded
damages of approximately US$0.7
million in the court of first instance in Torreón,
Coahuila. Both San Pedro and the Plaintiff appealed the
decision to the Second District State Court in the Judicial
District of Torreón. In December
2019, the Court confirmed the initial decision but,
subsequently, pursuant to an order obtained by the Plaintiff,
granted the Plaintiff an award of approximately US$23 million,
predominantly in damages for the Miguel Auza Mine not being in
operation. The book value of San
Pedro's fixed assets is US$4.8
million.
Excellon understands from an initial electronic notice that
San Pedro's appeal of this
decision to the federal courts of Mexico was dismissed on July 1, 2021, despite the decision not being
supported by the evidence, facts or law. The formal written
decision has not yet been released or made available for review by
the Company's legal counsel and, therefore, the details of the
decision remain to be considered, including the final quantum of
any award.
In any event, the decision is solely against San Pedro as defendant and the Company
believes that the Plaintiff has no recourse against Excellon's
other assets in Mexico (including
Platosa), Idaho, Saxony or
Canada. San Pedro is a wholly-owned, indirect
subsidiary of the Company that holds the Miguel Auza processing facility and original
Miguel Auza mineral concessions,
including the Evolución mineral resource disclosed in September 2020. San
Pedro generates minimal cash flows from milling fees charged
to the Platosa Mine for ore processing. The Platosa Mine is owned
and operated by an entirely separate subsidiary.
"This decision is incomprehensible from a legal and factual
perspective and is founded upon a circumstance that never existed,"
stated Brendan Cahill, President and
CEO. "The amount of the judgment, if upheld in the ultimate written
decision, is multiples higher than the value of the option
agreement or potential NSR at issue and the Miguel Auza Mine was
closed before even reaching production and prior to Excellon's
acquisition of Silver Eagle in 2009. The decision has the potential
to impact 90 jobs in the town of Miguel
Auza and the economy of northern Zacatecas. The written decision is not yet
available and we will advise further following our review. In any
event, this decision only has the potential to impact our
San Pedro subsidiary and none of
our other assets. We continue to operate in the ordinary course and
we are evaluating various additional alternatives regarding the
matter."
About Excellon
Excellon's vision is to create wealth by realizing strategic
opportunities through discipline and innovation for the benefit of
our employees, communities and shareholders. The Company is
advancing a precious metals growth pipeline that includes: Platosa,
Mexico's highest-grade silver mine
since production commenced in 2005; Kilgore, a high quality gold development
project in Idaho with strong
economics and significant growth and discovery potential; and an
option on Silver City, a high-grade epithermal silver district in
Saxony, Germany with 750 years of
mining history and no modern exploration. The Company also aims to
continue capitalizing on current market conditions by acquiring
undervalued projects.
Additional details on Excellon's properties are available at
www.excellonresources.com.
Forward-Looking Statements
The Toronto Stock Exchange has not reviewed and does not
accept responsibility for the adequacy or accuracy of the content
of this Press Release, which has been prepared by management. This
press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 27E of the
Exchange Act. Such statements include, without limitation,
statements regarding the outcome and impact of the legal action in
Mexico (including the dismissal of
the appeal by the federal courts of Mexico on July 1,
2021) in respect of the La Antigua mineral concession that
is part of the Evolución Property in Zacatecas, mineral resources estimates, the
future results of operations, performance and achievements of the
Company, including potential property acquisitions, the timing,
content, cost and results of proposed work programs, the discovery
and delineation of mineral deposits/resources/reserves, geological
interpretations, proposed production rates, potential mineral
recovery processes and rates, business and financing plans,
business trends and future operating revenues. Although the Company
believes that such statements are reasonable, it can give no
assurance that such expectations will prove to be correct.
Forward-looking statements are typically identified by words such
as: believe, expect, anticipate, intend, estimate, postulate and
similar expressions, or are those, which, by their nature, refer to
future events. The Company cautions investors that any
forward-looking statements by the Company are not guarantees of
future results or performance, and that actual results may differ
materially from those in forward looking statements as a result of
various factors, including, but not limited to, variations in the
nature, quality and quantity of any mineral deposits that may be
located, significant downward variations in the market price of any
minerals produced, the Company's inability to obtain any necessary
permits, consents or authorizations required for its activities, to
produce minerals from its properties successfully or profitably, to
continue its projected growth, to raise the necessary capital or to
be fully able to implement its business strategies. All of the
Company's public disclosure filings may be accessed via
www.sedar.com and readers are urged to review these materials. This
press release is not, and is not to be construed in any way as, an
offer to buy or sell securities in the United States.
SOURCE Excellon Resources Inc.